(April 2, 2021) Two new summaries – of a interim final rule concerning enhancements to NCUA’s Central Liquidity Facility (CLF) and of an NCUA “regulatory alert” on CFPB’s expanded exemptions concerning higher-priced mortgage loans (HMPLs) – were published by NASCUS this week.
As a benefit of membership, only members have access to the summaries.
Regarding the CLF enhancements, the NCUA Board approved the interim final rule (IFR) at its meeting March 18. Generally, it extends provisions enacted under the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that expanded CLF access beyond natural person credit unions to include access for corporate credit unions or a group of corporates. That expansion, implemented under an interim rule a year ago, was due to expire Dec. 31, 2020, but was extended through Dec. 31, 2021, under the Consolidated Appropriations Act, 2021, enacted into law late last year. Also extended are provisions approved in April governing CLF capital stock subscriptions by agent members.
The IFR also extends and clarifies the regulatory provisions related to a member withdrawing from CLF membership: The immediate withdrawal period for credit unions that joined the CLF between April 29, 2020, and Dec. 31, 2020, now continues through Dec. 31, 2021; for those joining between Jan. 1 and Dec. 31, 2021, the immediate withdrawal period continues through Dec. 31, 2022.
The rule took effect March 24; comments are due by May 24.
Regarding the regulatory alert on HPMLs issued in mid-March, the summary addresses the CFPB’s rule issued in February. The rule exempts from the HPML escrow requirement any loan made by a bank or credit union and secured by a first lien on the principal dwelling of a consumer if:
- the institution has assets of $10 billion or less (as of Dec. 31 in the preceding year);
- the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
- certain of the existing HPML escrow exemption criteria are met.
Proposed in July, CFPB said the rule represents the last mandatory rulemaking to implement the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155).
LINKS:
NASCUS Summary: Interim Final Rule, Central Liquidity Facility (CLF) (members only)
(March 12, 2021) Requirements for exemptions for some credit unions from establishing escrow accounts for certain high-priced mortgage loans (HPMLs) are outlined in a “regulatory alert” sent Wednesday from NCUA.
The message from the agency noted that in February the CFPB published its final rule that provides the exemption for smaller banks and credit unions. The rule exempts from the HPML escrow requirement any loan made by a bank or credit union and secured by a first lien on the principal dwelling of a consumer if:
- the institution has assets of $10 billion or less (as of Dec. 31 in the preceding year);
- the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
- certain of the existing HPML escrow exemption criteria are met.
The rule was proposed in July. At that time, the CFPB said it represents the last mandatory rulemaking to implement the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155).
Wednesday’s “alert” notes that qualifying institutions that have established HPML escrow accounts on or after April 1, 2010, will have 120 days after the Feb. 17 effective date of the final rule to cease providing escrows for HPMLs to take advantage of the new exemption.
“The HPML provisions of Regulation Z require that a creditor establish an escrow account for certain first-lien HPMLs,” the alert states. “While the HPML provisions include an exemption for small creditors operating in rural or underserved areas that meet certain requirements, the exemption under the EGRRCPA is an additional exemption for qualifying insured credit unions.”
However, the alert also notes some caveats. It states that even if an insured credit union qualifies for the exemption from the escrow account requirement, “if, at consummation, the transaction is subject to a forward commitment for sale to a purchaser that does not qualify for an exemption from the escrow account requirement, an escrow account is required under the HPML provisions, unless the transaction is otherwise exempt from the requirement.”
(Jan. 22, 2021) An exemption from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs) for smaller banks and credit unions was issued as a final rule this week by the CFPB. The rule, proposed in July, takes effect upon publication in the Federal Register. It exempts from the HPML escrow requirement any loan made by a credit union or bank and secured by a first lien on the principal dwelling of a consumer if:
- the institution has assets of $10 billion or less;
- the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
- certain of the existing HPML escrow exemption criteria are met.
When the proposal was issued, the bureau noted that HPMLs are generally closed-end consumer credit transactions secured by the consumer’s principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction by specific amounts as of the date the interest rate is set.
The bureau also asserted that the rule, as proposed, would reduce costs associated with escrow requirements.
LINK:
Consumer Financial Protection Bureau issues rule on higher-priced mortgage loan escrow exemption